Quebec budget 2024-2025: our reading of the measures affecting the economy and innovation

Quebec's 2024-2025 budget, entitled Priorités Santé | Education, reflects the government's determination to substantially increase investment in these two key sectors, which together account for 59% of program spending, while at the same time reviewing certain existing financial assistance.

There are three key points to note in this budget, which indicate the government's priorities in terms of the economy and innovation:

  1. minor and very specific additions to key initiatives, notably to the mandate of innovation zones, the Accès Entreprise Québec measure, and entrepreneurship.
  2. optimization of tax assistance measures, including three wage-based tax credits that will have an impact on IT talent
  3. changes to credits allocated to the Ministère de l'Économie, de l'Innovation et de l'Énergie (MEIE), indicating an expanded mandate for Investissement Québec

A range of budget envelopes to support key sectors

envelopes for major entrepreneurship and innovation programs, such as the Quebec Entrepreneurship Plan (QEP) and the Quebec Innovation Research and Investment Strategy (QIRIS2), are continuing. additional measures in the 2024-2025 budget reflect the government's focus on certain priority business sectors. These sectors include emerging technologies, aerospace, tourism and the bio-food sector, which will benefit from an envelope for the creation of a new investment fund to facilitate access to land ownership for young entrepreneurs.

Although the 2024-2025 budget does not specify future announcements of innovation zones, an additional $125 million over 5 years is earmarked to equip certain innovation zones with industrial laboratories to accelerate the valorization and transfer of innovation. Furthermore, in terms of major investment, the Capital ressources naturelles et énergie fund, which aims to support the exploitation and transformation of natural resources, the energy transition and the production of green energies, will be boosted by an envelope of $500 million.

Among the other envelopes for entrepreneurship, the budget includes an additional $22.6 million for 2025-2026 to maintainAccès Entreprise Québec services, designed to support the growth of businesses in Quebec's MRCs, as well as $9 million over 3 years, in addition to the PQE, to support the takeover of Quebec businesses and ensure entrepreneurial succession.

Finally, the budget includes measures to support the dynamism of the regions, or of certain key sectors in the regions, including the aluminum and forestry sectors, as well as a $16.8 million increase over 4 years for theProgramme d'appui aux actions régionales de la Capitale-Nationale to support the realization of tourism, economic and cultural projects.

To optimize certain tax assistance measures

the other major trend in the 2024-2025 budget concerns the optimization of government action, with the aim of achieving savings of $2.9 billion over 5 years. this optimization will come from efforts to rationalize the resources of the government's main enterprises, including Hydro-Québec, Loto-Québec, Société des alcools du Québec, Société québécoise du cannabis and Investissement Québec, as well as a review of tax incentives for companies in the IT sector.

In sum, three payroll-based tax credits- the e-business development tax credit (EBDC), the multimedia titles production tax credit (MMTC), and the film production services tax credit (PSTC) - will be revised, leading to savings of $874.5 million by 2028-2029.

Without going into the details of the planned revision of these tax credits, the objective will be to restore the existing inequity between technology companies whose employees are part of the same pool of main-it workers. In addition, the government hopes that the removal of a salary ceiling from the CDAE and CTMM will encourage companies to locate high value-added activities in Quebec.

It should be noted that some of the funding earmarked for the healthcare sector relates to innovation, such as the plannedacceleration digital shift in the healthcare network with the arrival of the Digital Health Record, and increased investment in prevention and innovation to better respond to pandemics. Finally, for the retention and attraction of talent, a budget of $370 million over 5 years is earmarked to strengthen support and services aimed at attracting, succeeding and retaining these future graduates in higher education institutions.

A broader mandate for Investissement Québec to support businesses

If we look more specifically at the budget allocated to the Ministère de l'Économie, de l'Innovation et de l'Énergie (MEIE), we see a continuation of the spirit of government efficiency, as the Quebec budget indicates a decrease of 228 million. The Ministère will go from a projected 1,824 million for 2023-2024 to 1,596 million for 2024-2025.

Looking more specifically at the amounts allocated to the MEIE for 2024-2025, an increase of $117 million is planned in interventions relating to Program 4 - Economic Development Fund, a program that concerns the administration and payment of financial assistance granted by Investissement Québec. the decreases in the MEIE budget are planned mainly in the amounts allocated:

  1. Strategic industries and major economic projects (from $95 million to $62 million)
  2. Regional economic development and entrepreneurship (from $256 million to $211 million)
  3. Support for organizations and projects (from $210 million to $168 million)

Although it is possible that the amounts allocated to Program 4 - Economic Development Fund will be used for various existing programs, which are currently managed by Investissement Québec, we can anticipate that some business assistance programs will be supported by Investissement Québec, a trend that has been underway since the expansion of this economic development agency's mandate.

In conclusion

this budget is a continuation of the actions already announced for existing government strategies, and we did not expect an increase in existing budget envelopes. we await with great interest the next actions surrounding the SQRI2, the future revision of the PQE, as well as the announcements of the next innovation zones.

we will continue to lobby the Quebec government to ensure that we address the three issues we currently perceive in the innovative entrepreneurship business ecosystem: the lack of upstream financing, the informational problem, and the mental well-being of entrepreneurs.

In fact, these are the three issues on which we made representations as part of the 2024-2025 pre-budget consultations, and we'll be continuing our work over the course of the year.